Daily Market Update for 11/24

Original Chart

Notes

Ideas always welcome in the comments. Errors will be amended as comments on TradingView or corrected inline in my blog.

Wednesday, November 24, 2021

Facts: +0.44%, Volume lower, Closing Range: 99%, Body: 65% Green
Good: High closing range, support at 15,600, A/D ratio
Bad: Low volume , lower high
Highs/Lows: Lower high, Lower low
Candle: Thick green body above a long lower wick
Advance/Decline: 1.13, more advancing stocks than declining stocks
Indexes:SPX (+0.23%), DJI (-0.03%), RUT (+0.15%), VIX (-4.13%)
Sector List: Real Estate ( XLRE +1.34%) and Energy ( XLE +0.98%) at the top. Consumer Staples ( XLP -0.30%) and Materials ( XLB -0.71%) at the bottom.
Expectation: Sideways

Market Overview

Mixed economic data caused a dip in the morning before indexes reversed and mostly closed higher. Trading volume was significantly lower on the day before the Thanksgiving holiday.

The Nasdaq finished the day with a +0.44% gain. Volume was lower than the previous day. The index dipped to the 15,600 area before reversing and moving higher the rest of the day. The dip created a long lower wick underneath a thick green body covering 65% of the candle. The closing range of 99% is excellent, but the lower high and higher low make an inside day for the index. There were more advancing stocks than declining stocks.

The S&P 500 (SPX) gained +0.23% for the day. The Russell 2000 (RUT) climbed by +0.15%. The Dow Jones Industrial Average (DJI) declined -0.03%. The VIXVolatility Index dropped -4.13%.

Real Estate ( XLRE +1.34%) and Energy ( XLE +0.98%) were the top sectors for the day. Real Estate likely got a boost from inflation fears. Consumer Staples ( XLP -0.30%) and Materials ( XLB -0.71%) were at the bottom of the sector list.

Core Durable Goods Orders for October were on par with expectations, but total Durable Goods Orders (including transportation items such as airplanes) were below the forecast.

The weekly Initial Jobless Claims came in at 199,000, significantly better than the expectation of 260,000.

Michigan Consumer Expectations and Consumer Sentiment for November were both better than expected. That aligns well with rising consumer spending, even among higher inflation . High inflation continues to be a concern as the PCE Price Index data for October grew at a higher rate than in September.

The FOMC released the November Meeting Minutes in the afternoon. Analysts picking apart the minutes now expect a faster pace for bond purchase tapering and potentially a higher number of interest rate hikes in 2022. Markets responded positively to the meeting minutes, rallying after the release.

The US Dollar strengthened with the index ( DXY ), gaining +0.36% for the day. US 30y and 10y Treasury Yields declined while the 2y yield continued to climb. High Yield ( HYG ) Corporate Bond prices dropped while Investment Grade ( LQD ) Corporate Bond prices rose.

The put/call ratio ( PCCE ) declined to 0.633. The CNN Fear & Greed Index remained in the Greed area but is moving toward neutral. The NAAIM Money Manager Exposure Index remained above 100 for a fifth week, climbing slightly to 103.14 this week. The exposure to stocks remains high as other investment instruments cannot beat high inflation .

All four largest mega-caps gained for the day. Apple AAPL ) had the biggest gain among the four, advancing by +0.33%. Alphabet GOOGL ) rose +0.23% but remained below its 21d EMA . Microsoft MSFT ) and Amazon ( AMZN ) had slight gains, inching up +0.07% and +0.01%, respectively.

Shopify (SHOP) was the top gainer for the day, gaining +3.54% headed into the biggest shopping weekend of the year. Pepsico PEP ) was at the bottom of the mega-cap list, declining -0.91%.

Most stocks in the Daily Update Growth List gained for the day. CloudFlare (NET) topped the list, climbing +6.90% on Wednesday after dropping more than 10% on Monday. SNAP (SNAP) declined -1.99% and ended up at the bottom of the growth list.

Looking ahead

Markets are closed on Thursday for the Thanksgiving Holiday. They will open again on Friday but will close early at 13:00.

There is no economic data or significant earnings reports scheduled for the next two days.

Trends, Support, and Resistance

The Nasdaq dropped below the 21d EMA in the morning before gaining support at 15,600 and rallying most of the day. The close above the 21d EMA and high closing range are positive signals.

If the one-day trend line continues into Friday, expect a +1.08% gain.

If the index returns to the trend line from the 11/10 low, that will result in a +0.54% gain.

The five-day trend line points to a -1.17% decline.

Wrap-up

Mixed economic news caused some selling in the morning on Wednesday, but investors came back in to buy the dip. The higher inflation is not providing many options for investors outside of the stock market. That will mean more volatility and rotations over the remainder of 2021 as investors search for better stock returns.

Based on the inside day and lower volume for Wednesday, I’m expecting a Sideways move for Friday’s short trading session.

Stay healthy and trade safe!

Comments

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